Within a year of launch of 5G services, Bharti Airtel has got 60 million users on this network. Its average revenue per user (Arpu) has crossed the targeted Rs 200-mark through a combination of tariff adjustments and migrating subscribers to higher value packs. Gopal Vittal, CEO and managing director, in an interview with Jatin Grover & Rishi Raj, discusses why 5G monetisation will not happen and how only organic tariff hikes will not lead to an Arpu of Rs 300. Excerpts: Q. It’s been a year since 5G services were launched, but monetisation does not seem to be on the cards. Why?A. Currently, 5G is being given at 4G rates, so there’s no monetisation in that sense. Our belief is that, 4G and 5G are just better, more efficient ways of delivering the same outcome. As a consequence, we don’t believe that for B2C (business-to-consumer) we should be charging a higher price for 5G data. Data is data. Our target is Arpu and that is a result of overall tariffs and that’s the way it should be. In B2B (business-to-business), there are opportunities for monetisation, but they are smaller. For example, private networks, where we are working with companies to improve their productivity or working with companies to do some robotics in the plant to drive down inventory in real time. We are working with one of the large manufacturing companies in South India for surveillance of their factory premises so that they can actually reduce leakages, etc. So those are the things that we are looking at. That will be smaller in its relative scope and ambition.
Q. You said in B2B there is a scope for monetisation but how has been the offtake till now?A. Today, there are no applications that are leveraging this technology. The only application today is ‘speed’. And if you on your device, are getting 400 Mbps, which you may be getting, if you’re on 5G, you won’t even know the difference because what you’re using is the same browsing application, same YouTube, chatting that require only 4-6 Mbps. The power of 5G is really to drive things like concurrency, which means more and more machine-to-machine communication; latency, which means faster packet transmission to the device. For example, remote surgery and things like that. Those applications are still not there anywhere in the world, so it will take time.
Q. Will 5G for enterprises throw up a big opportunity?A. There’s a small opportunity because if we see our portfolio, about 26-27% of that is Africa, about 50-53% is mobility and the rest of the non-wireless portfolio is about 18-19%. Of that 18-19%, we have got a home’s business and a content business. So B2B is a smaller part of the portfolio, but it is growing. This monetisation, however, in the overall scheme of things, will be small.Q. Airtel’s Arpu recently crossed Rs 200, without an increase in headline tariffs. What is the next target?A. At some stage, we want to get to Rs 300 Arpu-mark. For us, the single biggest opportunity in the consumer business is premiumisation. For every feature phone user that moves to a smartphone, we get an increase in Arpu. For every prepaid user that moves to postpaid, we get an increase in Arpu. For every mobility user that also adds broadband, we get almost a doubling in Arpu. And for every broadband user that that gets to convergence, which is Airtel Black that in the form of content and mobility, there’s a quadrupling of Arpu. While the feature phone segment in India is about 200 million phones, smartphones segment is about 550-600 million phones, broadband-postpaid converged segment is very small, the upside opportunity for this constant premiumisation is a long-term opportunity. This is the reason why our organic increase in Arpu has been happening despite no tariff increases.Q. But by when do you think the company can touch Rs 300 Arpu mark?A. I can’t give you a target. I think organic increase in the Arpu will not get us there, we will need a couple of rounds of tariff increase over the next few years. This is not up to us, it’s a competitive market.Q. When can we expect the next headline tariff hikes?A. We keep on experimenting different things. So we took up the pricing of the entry level plans recently. We’ll keep seeing what opportunities there are to raise it. And at some stage, if there has to be some move, we will make it. If competitors do not follow, we will reverse it.Q. What is the plan on calling residual money with regard to Rs 21,000 crore rights issue?A. At this point, we don’t need the capital because the operating free cash flows are more than adequate to meet for requirements – whether it’s on capital spending or de-leveraging.Q. When are you planning IPO of Airtel Payments Bank?A. I think at some stage, will be very happy to dilute on Airtel Payments Bank. The business is doing well. We have 55 million monthly transacting users. The business needs to continue to grow and at some stage, we will look at diluting.Q. How prepared you are to comply with the Digital Personal Data Protection (DPDP) Act?A. Our belief is that whatever you do must be based on consent. Our business model is not a model based on advertising, our business model is based on subscription. And inextricably, subscription means consent. That’s why people trust us with their data. We are working to comply with the Act.
